What’s Love Got to Do with It? Not Much, in Congress
By Renu Zaretsky :: July 31st, 2014
The Senate won’t “Bring Home Jobs…” at least not through the bill that would have denied tax deductions for costs of moving corporations out of the country. The Bring Home Jobs Act needed 60 votes to pass but received only 54.
The House GOP may vote to put the estate tax to death. They’ve been trying to repeal the estate tax for over a decade, and after the August recess, they may try again. House Ways & Means Chair Dave Camp doesn’t believe “death should be a taxable event.” TPC notes that the estate tax is the most progressive federal tax: Estates of people in the top 0.1 percent of the income distribution paid more than half of all estate taxes in 2011.
At least everybody loves the EITC, through President Reagan may not have loved it as much as some think. The Earned Income Tax Credit supports work and strengthens the safety net. And, unlike the estate tax, it enjoys bipartisan support. But TPC’s Len Burman sets the record straight on President Reagan’s views on the program. Reagan is often cited as saying the EITC was the best “anti-poverty, the best pro-family, the best job creation measure” to come out of Congress. Guess what? Reagan wasn’t just talking about the EITC. He was describing the entire 1986 tax reform bill. Maybe that’s history worth repeating.
As for the game of chicken over the Highway Trust Fund… The House Republicans may go home Friday and force Senate Democrats either to accept the House version of its funding patch, or chance being blamed for shutting down construction projects. Norm Ornstein of the American Enterprise Institute wonders when Congress will get past its test of wills and address the trust fund’s long-term funding structure. Congress is aware of a solid idea to wean the Fund off of the gasoline tax and rely on a mileage-based user fee. But given its current course of action, Ornstein warns that the 113th Congress could instead be “a top contender for worst Congress ever.”
But there’s a truce between a city and a healthcare giant: UPMC, a Pittsburgh-based nonprofit healthcare provider, pays no taxes on 86 percent of its property, costing the city of Pittsburgh $20 million a year. The city, under former mayor Luke Ravenstahl, sued UPMC to strip it of its nonprofit status, but the medical giant sued back in federal court, arguing that it was singled out unfairly and denied due process. The city’s new mayor, Bill Peduto, dropped the city’s suit, and UPMC dropped its: “We decided, let’s have this conversation for the benefit of Pittsburgh. Let’s put away the guns” and work together outside the courts.
Another Illinois pharma wants to invert, but in New Jersey, one plans to stay put. Hospira, Inc., a drugmaker based in Illinois for now, may acquire the Netherlands-based medical nutrition unit of the French beverage company Danone for $5 billion. The Netherlands’ corporate tax rate is 25 percent. Merck, the US’ second-largest drugmaker, would rather buy US firms than invert. CEO Ken Frazier said, “we're trying to get Congress to look at how all US firms are at a huge disadvantage.” He’s promoting tax reform instead.
If you’re wondering for whom the Chicago bell tolls… The City Council has voted to more than double the telephone tax in order to avoid a property tax increase before the fall election. Starting September 1, the price of a land line or a cell phone in Chicago will rise by $1.40 per month. The money will be used to shore up the city’s four pension funds.
Bitcoin trading in Europe may no longer remain tax-free. The EU Court of Justice will decide whether transactions between virtual and traditional currencies are “services” under the EU’s value-added tax rules and whether those trades are tax-exempt. It will examine the case between Swedish tax authorities and a would-be online Bitcoin trader. The Swedish tax authorities want to collect the VAT on the trader’s transactions. In the US, Bitcoin is taxed as property, not currency.
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